Expert Advice on Regaining Possession
With one in five NLA members reporting they have had rent arrears in recent months, UK Landlord asked experts Nigel Saunders at NLA Rent Arrears and Landlord Action’s Paul Shamplina for best practice approaches to tackling rent arrears and, if it comes to it, regaining possession of your property.
UK Landlord: Some tenants assume the landlord will take the deposit in lieu of the last month’s rent. What can landlords do to avoid this? Nigel Saunders, NLA Rent Arrears:
The tenant should not assume that the landlord will deduct the last payment from the deposit. Legally, if the tenant does not pay the last month’s rent, the landlord could take action for breach of contract. The landlord should ensure the tenancy agreement is absolutely clear in what the deposit covers and the terms and conditions for returning it.
UK Landlord: At what point should a landlord be concerned if a tenant is in arrears?
Nigel Saunders: A landlord should be concerned as soon as the tenant falls into arrears with his rent. Addressing a late rent payment as early as possible is the proven best way to recover the situation, ideally by correcting the arrears position or, failing that, identifying a best strategy to manage the landlord’s exposure.
To address rent arrears at this stage, we make early contact with the tenant by letter, and follow up by telephone to discuss the outstanding payment. In negotiating a satisfactory outcome it is important to understand what has caused the problem, what the solution to the problem is and to agree a mutually acceptable arrangement. If there is a guarantor in place, we contact the guarantor to advise them of the arrears and remind them of their responsibility.
It is important to document any activity that takes place such as dates and notes of contents of telephone calls and letters. This will be important if further action is required. Debt collection protocols require a reasonable level of telephone and letter activity to be demonstrated prior to further action.
UK Landlord: If it gets to the point where a landlord needs to regain possession of their rental property what should landlords do?
Nigel Saunders: Coping with rent arrears and any subsequent possession proceedings is one of the most stressful situations a landlord will encounter. Firstly the landlord should ensure that telephone and letter collection activity has taken place before starting legal action. With initial collection activity having failed, the first stage of this is to serve the appropriate notice.
If the tenancy is still within the original fixed term (and there are at least two full months’ rent owing) then the landlord may serve a Section 8 Notice on the tenant.
If the tenancy has reached the end of the original fixed term or the landlord wants to end it at the end of the fixed term and wants to evict the tenant from his property then a Section 21 Notice should be served on the tenant. However a Section 21 Notice does not recover rent arrears.
Upon expiry of these notices appropriate legal action may be taken through the Courts.
UK Landlord: What are the main ways of repossessing a property and which do you advise landlords to opt for?
Paul Shamplina, Landlord Action: A lot will depend on the individual circumstances of landlords and their tenants. For example, is the tenant on housing benefit? Are they a student? Are they an asylum seeker? What type of employment they are in? Since we are unable to give general answers to these sorts of questions, Landlord Action operates a free problem tenant advice line for landlords and letting agents, where one of our experts will be able to give specific advice in terms of the best way to proceed with a problem tenant.
In terms of the best strategy to seek possession, use mandatory grounds as opposed to discretionary grounds. This makes the case much stronger, and our experts can advise landlords on an eviction strategy.
UK Landlord: Does it make any difference to the way in which you seek possession if a tenant is in breach of a clause in the lease or is in arrears?
Paul Shamplina: Yes. If a tenant is in two or more month’s arrears, we would serve a Section 8 Notice and the judge will grant possession to the landlord based on the fact that rent arrears are a mandatory ground for seeking possession.
Notices served based on breach of tenancy (for example, the tenant has changed the locks, pets, noise and general nuisance, etc) are discretionary grounds for possession and it is up to the judge’s discretion whether a possession order is granted. Clearly, seeking possession based on these sorts of grounds is weaker than under mandatory grounds.
UK Landlord: If a landlord serves a Section 21 notice at, for example, the start of tenancy and then lets the tenant stay on after the expiry of the lease, is it necessary to serve another Section 21 notice?
Nigel Saunders: Yes, the landlord would have to serve another Section 21 notice as the tenancy has changed from a fixed term to a periodic tenancy.
UK Landlord: What is the best way for landlords to approach getting back the money owed to them once a tenant has been evicted?
Paul Shamplina: The best way to getting your money back will depend on the due diligence that landlords will have completed prior to setting up the new tenancy. For example, the landlord should look to secure a guarantor agreement (for example, from an employer, parent, business partner etc). This way, the guarantor would be liable to pay any outstanding rent that the tenant did not make themselves.
If the tenant is in arrears and has been evicted, they will need to be traced to a new address (if they haven’t left a forwarding address). If it becomes clear that the tenant has many outstanding debts, or were on housing benefits, debt recovery would be fruitless. However, if the tenant has a good job or has other assets, then it is probably going to be worth pursuing.
UK Landlord: What are the main thing landlords should remember when it comes to recovering rent arrears and regaining possession of a property?
Paul Shamplina: Many difficulties that landlords face could have been avoided if landlords and their agents were more thorough when it came to tenant referencing.
There is no substitute for methodical referencing and being on top of credit control. Many novice landlords will wait for months before chasing up a tenant properly and serving notices. During this time, they are continuing to lose rent. So, the key is to act quickly.
We always believe in giving the tenant a chance to pay off arrears. If you find out mid-tenancy that the tenant has lost their job or has fallen in financial hardship, make sure that you act promptly with regard to them applying for local housing allowance.
Take them to the housing benefit office and help with their application – this will demonstrate that you are a responsible landlord, as well as keeping any arrears to a minimum.
NLA Rent Arrears is an online facility that landlords use to instruct a professional rent recovery team to collect outstanding rental amounts from tenants. Acting on behalf of its client landlords, NLA Rent Arrears contacts tenants by phone or letter, visits them at the tenanted address, serves notice and undertakes possession proceedings.